One top official of a U.S. Justice Dept. regional office, who has long probed and prosecuted construction industry fraud, offers a first-hand account of practices he sees. He has requested anonymity.

"It’s pretty clear that the construction industry generates the most business and corruption cases in the U.S. Locally based companies know each other, and if they all get along, they can make more money. It’s a pattern that occurs all over.

Related Links:
  • Pressures and Temptations Have Industry Walking A Fine Line
  • Did Ex-CEO Accused of Fraud Have No Fear of Being Caught?
  • Universities Elevate Ethics Education
  • Global Corruption Foes Gaining Ground
  • "There are infinite ways to defraud the government and others of money. Crimes do not have to involve government dollars; it’s a crime to rig bids on a private job too. This is how business is done. It’s epidemic. How do we find out? It’s usually the odd man out, disgruntled employees, ex-spouses or whistleblowers who tell us about crimes. I‘d like to see more whistleblowers come forward.

    "We have an amnesty program. If three contractors rig bids and we investigate, the guy who comes to us first and blows the whistle gets amnesty, provided he is not the ringleader. But it only goes to one. The first one to come to us gets the ‘get out of jail free’ card. Using amnesty has generated billions of dollars in cases. Usually if an investigation begins, one cartel member will get nervous. The question always is: How much do they trust their co-conspirators?

    "Prequalification can set the stage for bid rigging because it is a barrier to entry and limits competitors. Including a non-collusion clause in a contract goes a long way. It puts procurement people on notice.

    "The defense in every case is ‘we were just trying to stay in business.’ But in every case, they weren’t making 6 to 8% margins, more like 25%. They get addicted to the extra return and don’t want to stop. Money is the worst opium."